trump administration. >> we have struggled from the inception of this country. the fight against racism, sexism, xenophobia, and homophobia. we are telling mr. trump and his friends, loudly and clearly, we are not going backwards!, we are going forwards! targeting marco rubio senior citizens for financial fraud. >> if you look at the list of the top medicare fosters in america, they are entirely -- almost entirely from south florida and from the island of cuba. when we are about to arrest them, they leave to cuba with millions of dollars. it's an outrage, it is grotesque, it has been extensively covered by the press in south florida treated people are notk that seniors abused, they are victims. >> all c-span programs are available at www.c-span.org, on

our homepage, and by searching the video library. the national association for business economics host of policy conference in washington, d.c next peter navarro, white house trade council director, talks about the trade policy goals of the shrub administration. this is 50 minutes. >> good morning. >> -- to be president of name. made is the voice of business economics in america and globally. 33rde here today for the economic policy conference, wonderful to see some any of you with us here. ,ur conference theme this year is recalibrating policy growth for policy or sustained growth. i think that is quite apropos,

given the topics that will be debated at our first opening session. ourdelighted to invite moderator for the session, frank not tough, chief economist -- economist of core logic, and cochair of our planning committee come for this conference, to introduce our speaker. thank you. , to introduce our speaker. thank you. [applause] >> i would like to invite peter navarro to come and present to us today. peter navarro is currently the director of the white house national trade council, and prior to that, he has been a professor in economics and public policy. was at the university of california irvine for the last 25 plus years. he worked in san diego before that. deal of with a great experience. join me in welcoming peter to

the platform. [applause] mr. navarro: good morning. not church here, come on, good morning. thank you, thank you. i want to thank the national association of business economists who was kind of patients to deliver this keynote address. it is a great honor. the broad topic wants to talk about is whether trade deficits matter. before i do that, let me tell you about what i do is the director of the white house national trade council the micro level, i managed a national trade council swat team, designed to rapidly assist our nations manufacturers, workers, ranchers and farmers, with any type of trade problem they may be having. whether it is with a cheating perp -- competitor or difficulty within our own bureaucracy or

anything in between. every day as the requests come in, i'm continually made -- i continually see how difficult it is for our companies to compete on a level playing field. i case in point is the whirlpool , headquartered in michigan. this heartland of america and our -- icon is grappling with a practice called, country hopping. that is when two of its south korean competitors, lg and samsung, moved their production to another country each time whirlpool wins and antidumping case against them. such country hopping has happened twice to whirlpool already. the latest case, lg and samsung, simply moved their production from china to vietnam and thailand. the kind ofisely trade cheating that must be stopped. it undermines the whole international order, even as it puts thousands of americans on

the unemployment line and imposes millions of dollars of losses on companies like whirlpool. level, -- macro level, i have also assisted trade related issues. important trade negotiations that will move forward with national partners like mexico and japan. allies such asr japan and great britain. the overarching goal is to promote president trump has called, free fair and reciprocal trade. look at what time: free, fair, and reciprocal trade. the problem is that america's trade with the world is anything but reciprocal. while we have the lowest tariffs and nontariff barriers in the capital -- foreign and foreign capital enters this country with fewer stretch and,

american exporters, service providers and investors are not afforded the same reciprocal treatment in most if not all of the countries we run significant trade deficits with. that observation is a perfect today: tour topic trade deficits matter? it is an important question. america's trade deficit is large and persistent, $734 billion in 2016, and on the order of about $2 billion every single day. communist china accounts for roughly half of that trade deficit and goods, 47% to be exact, while capitalist germany, mexico, and japan each run annual surpluses with america of over $60 billion -- dollars, 27%h accounts for another of that deficit cumulatively.

our bilateral deficits used in the yardstick of the percent of the volume of our two-way trade, ireland and at 65%, 61%,ously, respectively, actually outstrip , while indonesia, malaysia, thailand, and italy are behind. countries with which we -- we run significant deficits on the order of $15 billion annually or more include india, south korea and taiwan, france, and switzerland. what all this adds up to is a group of 16 countries that account for the lions chair of our deficit problems. if you see these bilateral trade deficits as a problem of course. ,hat is the question before us to trade deficits matter? more specifically, to america's larger persistent trade deficits

pose an economic and national security threat? to begin, let's first knockdown the strongman, typically set up to debunk concerns over the trade deficit. that view is summarized in a quotation from a think tank analyst. i will read to you in two parts. here's part one. the trade deficit is not caused by unfair trade practices declining industrial competitiveness at home, unqou te. if this is true, one must wonder why countries ever bother to use unfair trade practices, like tariffs, quotas, nontariff barriers, forced technology transfers, or currency manipulation to boost their competitive advantage abroad or protect their markets at home. one must also wonder why

countries never try to improve their industrial competitiveness by lowering their corporate tax rates or reducing the regulations. or, by trying to boost research or, by trying to boost research and develop it, rates of innovation -- you may agree with me that such a statement seems silly on its face. less silly however, is part two of the trade deficits don't matter argument. reflect ade deficits flow of capital across international borders, flows that are determined by national rates and investment. important point here. this renders trade policy an effective tool for reducing the nation's trade deficit. this of course, is the age old accounting identity argument, that any deficit in the current -- keralaccount must

by surplus. view,nds payment point of countries always imbalance. it goes,hat as far as there are two of his problems with this statement. first, it fails to recognize that a persistent, current account deficit offset by capital inflows, inevitably must be involved in equally persistent transfer of assets and net worth from the deficit country to the surplus country. over time, this can have significant long-term negative consequences. it may result in what warren buffett has referred to as, conquest by purchase. this is a risk i shall return to later when i discussed the trade deficit as it relates to national security. the second of his problem with the statement is that it nearly construes trade policy describes

it as an ineffective tool for reducing the nation's deficit. at least in the trump see tax,ation, we regulatory, and energy policy reforms, along with eliminating the currency manipulation and other forms of trade cheating, as essential elements for broader policy, and introducing our bilateral trade deficit, and increasing growth and jobs. for example, suppose the trump administration succeeds in lowering the corporate tax rates, trimming the regulatory burden, reducing the cost of energy, and imposing counter billing duties on currency manipulators. in this changed incentive structure and improved business climate, companies like ford and carrier would tend to invest more in michigan and indiana, rather than offshore their production to mexico and china, the export their products back into the united states market. more broadly

defined trump-trade policy, working in concert with traditional tools to defend against practices like dumping and illegal subsidization will partly be ineffective juried indeed, this broadly defined will createpolicy many more jobs in the homeland and heartland, even as it improves our trade balance. the larger point, is that this current account versus capital account view of the world has the full grasp significance of the trump trade policy, even if it ignores the basic reality of the global marketplace. , with me as a prelude turn now to the armaments in support of the claim, that trade deficits not only matter when it comes to jobs and growth in national security, the matter a great deal. at this point, you might not just that i prefer to focus on

the trade deficit in goods, rather than the overall trade balance, which includes services . while services are a critical part of our economy and an essential part of trade, as these are incredibly productive and equally important agricultural -- is the equally important agricultural sector, manufacture goods tends to have a higher job multiplier and .ommand higher wage levels it follows that if the united states is to increase its rate of job creation and to see if income levels rise, and in the process rejuvenate the once vibrant manufacturing hubs, states like ohio, michigan, north carolina, and pennsylvania , we must focus on enhancing and expanding our industrial base to prudent tasks, regulatory energy, and trade policies. who will of you inevitably claim that automation

, not bad policy, is the real villain in the decline of american manufacturing employment has simply note this for the record. while the percentage of americans working in manufacturing is -- has fallen by a percent today, germany and contrast which has some of the most advanced robotics world, continues to employ only 20% of its workforce in manufacturing. note thatint, i also strong manufacturing and in -- defense to show base is the bedrock of america's national security. i will return to that theme later. for now, we'll turn to the question as to why trade deficits matter when it comes to economic growth and job creation. let's begin by noting that growth in any nations real gross to mature product, or gdp, and therefore its ability to create jobs and generate additional income and tax revenues, depends

on only four factors: consumption, government spending, business investment, and exports. let's look at net exports term, which is exports minus imports. when imports exceed exports, that is a trade deficits. -- deficit. if we are able to reduce our trade deficit. -- through tough smart negotiations, we should be able to increase our growth. i will give you an example. -- suppose the u.s. negotiates bilateral trade deals with germany and mexico this year. as a key part of the term sheet, each country agrees to purchase more products from the united states ban its now purchases from the rest of the world. this would show up in the government data as increased u.s. export, a decrease trade deficits, and an increase in u.s. gdp growth.

the u.s. uses if its leverages company world's largest market, to persuade india to reduce its notoriously and japan to, lower its not carrier barriers, we will surely sell washington apples, florida oranges, california wine, and wisconsin cheese and harley-davidson motorcycles. just as surely, we will see our trade deficit fall, our growth increase, and real wage levels rise from seattle and orlando, to sonoma and blocky. --milwaukee. what about the investment term? here is the unfavorable tax, trade, and regulatory policies, pushing capital investment offshore, or discouraging new onshore investment at the margin. fixed investment

is reduced in the gdp question, quarter to quarter and year to year while the rate of economic growth and job creation that we could otherwise have achieved also be reduced. the is not the end of general story, however. it's such offshore production that generates products for export back to u.s. markets. for example, the american consumer buys a ford focus imported from mexico, rather than assembled in detroit, there is a further reduction in gdp growth through the next export channel. to understand this complex dynamic better, let's take a specific example that has been in the headlines, the carrier company. 2016 presidential campaign, kerry is management announced its decision to close its air-conditioner factory indianapolis, and move production to mexico with the

backt of selling products into the u.s., tariff free, under the nafta treaty. this is a move partially -- harshly criticized by canada trump. after the election, president-elect trump with vice president-elect pence successfully negotiated a deal, in which carrier will remain in the united states and expand its facilities. the deal will show up in anernment statistics as increase in investment, rather than a decrease. imports from mexico will be lower than the otherwise would be, and he was exports will be higher, if carrier sells more products overseas. critics might say the deal will make carriers air-conditioners more expensive, and harm consumers. .ou cannot

you cannot buy an air conditioner commercials pay her mortgage -- policy, is that carriers sales occur to be up. this is on the basis that they were made in the usa, and consumers are responding to the positive message. the bottom line to paraphrase growth is good. growth that comes from a strategic deficit, and an equally strategic business investment, is especially good. now, let's turn to whether the question of america's largest persistent trade deficits might pose a threat to our national security. thatfrankly, is a question usually falls outside of the

silo walls and world of academic and business economists. rhetoric, this type of question within the context of the trade deficit, is simply a form of strategic risk assessment. . we must remember the central premise of those who debunked the dangers of trade deficits, to which any duck -- -- any deficit must be supplemented by investment in the u.s. of foreigners. . with whom heers accumulates where trade deficits, in the benign version of this field, will return our dollars to u.s. shores. by investing in war bonds and stocks, by building new production facilities, and of course, our mortgage and loan rates will be lower, our stock market will be and ourly capitalized, people will be fully employed.

here's the best, yet weakest part of the debunkers argument. they say, such a pattern of wealth transfer offshore, cannot possibly persist. you know the argument, eventually, the dollars we can, our exports must rise, or imports must fall, and trade, according to the theory, must inevitably come back into balance. here's the problem. , exchangel world rates, manage flows not right we arey manipulation, seeing appropriate or expected adjustments. instead our trade deficit remains large and persistent. if the current distorted market patterns continue, to paraphrase keynes, in the long run we are all likely to be owned by foreigners. this is precisely the threat i listen to earlier. that, radical warren buffett first race this so-called,

conquest by purchase. in buffett's view, the u.s. trade deficit is allowing our net worth to be transferred abroad at, in his words, an alarming rate. willrns, that foreigners own so much of america that we will not have anything left to trade and we will work long hours to have food and to service our debt. even this buffet version of conquest by purchase is too sanitized and the nine. titized and too benign. suppose that it is not a benign ally buying of our companies, our technologies, our farmland and our food supply chain and ultimately controlling much of our defense industrial base. it is a rapidly

militarizing strategic rival intent on hegemony in asia and of course world hegemony. how much this alternative version of conquest by purchase and for us? and our sons and daughters? lose by cash registers ringing? maybe lose a hot war? today, after decades of trade deficits, the mass migration of our factories offshore, we have only one company in the entire united states that can repair navy submarine propellers. today, we do not have a single company in the u.s. that can panel displays for

our military aircraft. the other items we cannot havece in the u.s. that important military applications include everything from night vision goggles and certain types of armor plated steel to integrated circuits. meanwhile, i was still industry is on the ropes and our aluminum industry is flat on his back -- it's back. is shipbuilding industry gathering particles, we have already begun to lose control of our food supply chain. there is a full war ground game underway for the foreign purchase of large swathes of treasures in silicon valley. my point is this, most of those in our profession have chosen to ignore the broader national security risks that stem from large and persistent trade ourcits and the decline of manufacturing and defense industrial base. profession,t of our

as well as much of the mainstream media continues to embrace and espouse an antiquated view of the world that has little to do with the events or risks of our time. however, as vice president pence was remarked on the campaign trail, the people of fort wayne know better. i might add here, the pentagon knows better as well. admittedly harsh judgment of the state of international trade economics, let me conclude his remarks by addressing certain well-known arguments against taking action to produce our trade deficits. there is the inflation argument, i looted to that earlier. ifgoes something like this, you chop administration succeeds tough trade our negotiations and cracking down on cheating, this will drive the up and products

disproportionally on the poor. in the extreme view, even if a intony is dumping products our markets, we should take whatever they want to export and for providing consumers with great bargains and lowering our inflation rate. to me at least, this seems to be an elitist out of touch argument. it assumes that the poorest segments of our society would rather have cheap products than a good job and a good paycheck. i for 1 am far more focused on increasing economic growth. i'm not worried about any modest inflationary effects that might result from wiping away the from theade practices liberal trading order. as a second argument in defense of trade deficits, we don't or can't make it here. goes, the united

states does not and cannot produce many of the things that directly for consumption or indirectly for its supply chain. therefore, even a more muscular trade policy will have no effect on u.s. manufacturing jobs. the only thing that i can tell you here is that one of the major goals of the trump administration is to reclaim all of the supply chains and manufacturing capabilities that would otherwise exist if the playing field level. one of the again, major goals of the trump administration is to reclaim all of the supply chains and manufacturing capabilities that would otherwise exist if the playing field level. , remember, 20%s of germany's workforce is in manufacturing compared to 8% here in the united states.

of course, i know they will be difficulties and bottlenecks and labor issues to address as we see two rebates -- rebuild our manufacturing base. i know that this will all take time. that doesn't mean that we shouldn't try. the final common argument used in defense of trade deficits and more broadly, the status quo, if we try to stop unfair trade if we contribute to these trade deficits, that will start a trade war. i would ask in response to this obvious alarmism the following question, would not both america and the global trading order be better off if trade were truly free, fair and reciprocal as president trump is asking for. to the principles of fairness

poseeciprocity, i would these additional questions, is it a coincidence that japan has barriers not tariff and exports more vehicles to the united states in today's that the -- then the u.s. exports to japan in a year? is it fair for germany to provide its exporters with a 90% -- 19% rebate when under the unequal treatment of power incontact system, by the world trade organization, exporters from america to germany can't get a reciprocating even gets rebate. rebate.rocating india has some of the highest tariffs in the world and harley davidson has to export its order cycles to india in parts for assembly by local hands. as it fair for countries like vietnam and thailand to serve as

platforms for the divers and eric dumping of chinese state-owned industries and korean conglomerates? company sethinese up on u.s. soil and sell brewed into our markets when a u.s. company producing on chinese soil must take on a 50% joint venture chinese partner and run the very real risk of losing its intellectual property? i could go on and on here. if i had to filibuster all day during this conference, i won't do that. all i would need to do is pull out a copy of the latest trade estimate reports on foreign trade barriers published by the united states trade representatives and start reading it. filibuster, ithat could just as easily ask this, how come that report gets bigger

every year? what i am saying here is that trade should be free, fair and reciprocal just as president trump has stated. on that note, let me be abundantly clear, the broader goal of the free-trade policy based on fairness and reciprocity is not to raise either terrace or nontariff barriers rather, it is simply to encourage our trading partners to lower theirs. a policy of free, fair and truly reciprocal trade that begins and ends with you believe that bilateral trade deficits do indeed matter and it is a critical economic goal. in the interest of national security, to reduce these deficits in a way that is expanding over all trade, even as americans are allowed to compete on a level paying field

-- playing field. our workers and domestic manufacturers and our farmers and our ranchers deserve no less from our country's trade policies. it is long past time that we deliver both for them and for america. and iyou for listening look forward to your questions. [applause] >> you should have cars -- cards or paper at the table. staff members, they will bring your questions up to me here. thank you for your remarks here today. one principal you made very clear is that trade should be,

free, fair and reciprocal. is releasing a survey of its membership. there was clearly a majority that felt that trade should be freer. we should have freer trade. generally oppose any restrictions, unfair restrictions on trade. there was also a sentiment in the survey that u.s. tax policy may be impeding the export sector. you mentioned that tax reform was one of the critical essential elements that the administration would be looking sector.lp the export weone of the key themes that hammered on in the campaign was the idea that if you're going to solve your economic problems,

you had to think of it holistically. it is tax policy, it is regulatory policy, it is energy policy and trade. the analysis is that if you're at 2% growth and you deconstruct that, he tried to figure out how to get 3.5% or 4% likely want to do, each one of those components -- tax tradeacks -- there is a synergistic component. we always talk about corporate tax, in the context of how that would increase domestic investment and help us on the trade issue. we have the highest corporate tax rate of any major country in the world.

>> by the world trade countries n provides with that an advantage. your question, the most our tant thing is to get ax rate and our regulation and our energy prices down, all of together, and where ie tax for me was

always start first. got to adhere -- add here, can't they afford some cards for maybe pens?d this is priceless. tpp moved the u.s. towards free and fair trade. why did the administration walk >> trade agreement would have

auto death knell to our and auto parts industry which we back to need to bring life. for me, the worst thing about tpp hands down was the rules of or gin. -- origin. it was pathetically low and one thing doing moving be forward and this is publicly stated is to try to increase rules of origin provisions in all the that we'rerade deals going to pursue. we have rightblem

now, we have a lot of big but ings in this country those are basically assembly for foreign components. we have righthat now, this country just in those big boxes. they're in the small and medium firms that constitute the supply change and tpp moved us exactly the opposite of that goal. the other problem is it was a multilateral deal that sovereignty icant issues and didn't really our bargaining power as the world's largest economy in iggest world.

would agree of us here that if we -- anybody want in this room? anybody want to lower the corporate tax rate? give me a hand. only four people in this room want to lower the corporate tax don't want to t agree with me on anything? [laughter] crowd.h [laughter] >> our policy is simple.

lower the taxes. cut the regulations. hen you cut the regulations, you're going to be lowering our energy costs. down on trade cheating. make sure our bilateral trade deals include things like rules origin that benefit our supply chain. looking at andre trying to skate to where the puck is going to be. else you got? >> okay. here's one on currency manipulation. during his campaign, president the said he would direct treasury to declare china a manipulator. has the president changed his mind on that point? the treasury department has to report twice a year on that coming up in s april. steve here you get seat.ut him on the hot

currency feel chinese is over or undervalued right now? >> that's an interesting question. he asked whether he thought or ese currency was under overvalued which is a different question as to whether you think it.'re manipulating right? it's half of our trade deficit and good. the old styleieve to happen is d that you want to increase in value and the dollar is supposed to weaken and we're supposed to ell more exports, buy fewer

imports, and trade is supposed to come back into balance. so if you just look at it that lens, it's clear hat the chinese currency is undervalued. it's also clear that istorically the chinese have taken aggressive policies to ake sure the currency is undervalued. now, to the question of whether overvalued today, let me say two things about that. a point of view that because of the crackdown by that ent shi in china there's a lot of money trying to get out of the country. the currency ving down. the second order small effect compared to a onscious strategy by the chinese to essentially dramatically increase their oreign investment around the

world including here. day, i can't verify this but i've been told by people this is true. hina's buying one company a week in germany. ertainly they're very aggressive about buying assets here. so it's an interesting question. but how would do that since germany doesn't have an policy?ent trade sure.

they can't have any kind of united ons with the states about reducing their $70 billion trade deficit. that may or may not be true. i think that is useful to have a discussion with germany about ways that we could ossibly get that deficit reduced outside the boundaries and restrictions that they claim that they're under. but it's a serious issue. one of the most difficult trade deficits that we're going to have to deal with we're thinking long and hard about that. angela merkel is coming here soon and perhaps be some discussions bout how we can improve the

german u.s. economic relationship. 'm sure they can teach us a thing or two about how to get ore of the workforce in manufacturing. 25% e dollar was about overvalued and now the dollar is even stronger than it was a year ago. overvalued dollar is like a factories.es of u.s. what can the u.s. do to reduce overvalued dollar? >> don't really have any that.ts on he premise of the question i'm not wild about and i don't -- in erms of policy, i know there's always the debate about strong or weak dollar or whatever. focused on is imply how this country can

compete better internationally. andwe can sell more exports how we can prevent imports that dumped into our country. place.t's my >> okay. here's a question on the bilateral surplus and that the u.s. has. cal does free, fair, resip trade mean for those u.s. companies that specialize in services? the. >> well, service is of course a our counterbalance to trade deficit and goods and the administration is going to do it can to continue to abroad.services >> okay. what's your position import bank? >> i don't have a position on that. that one is ing

above my pay grade. do you square the likelihood that a return to jobs would be skewed to jobs when we don't have adequate job training in countries like germany. sure. so as the director of the my onal trade council, mission is to stand up for merican workers and domestic manufacturers. this is an effort between the department of commerce, department of labor, the overnment, the white house,

other agencies, to try to address the skill gaps and we're hard to do k really that. the first way to solve a problem is to recognize there is one and do that. know that. across the federal government sounds like a good step. idea.que yes. silo of be called the commerce. >> thank you so much, peter, for being here with us today. [applause] ended right on time. well done. [laughter] i would like to >> a confirmation hearing for the just department in the senate judiciary years from ron rosenstein. associate for the

attorney general overseeing justice and law enforcement. live coverage here on c-span. >> the ukraine foreign minister and diplomats of other nations were on capitol hill and the group testified on russian influence around the soviet bloc. or can also watch online listen. >> the have a nice life styles and money. those who make it to the top are not motivated by money. they want to have standing and

status full's something want to be respected and want power. the global ceo discusses her book on how the financial elite and their networks rule the world. >> see what is wrong with the systems, but i ask if they hold the prisoner -- the system prisoner or if it is the fault of the system. i concluded it is an interaction of both. >> sunday night. at certainlook monetary policies and whether they have helped or hindered growth. john spoke at the national association. this is about